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Blog on Startup India

Prime Minister Narendra Modi on the occasion of 69 th Independence Day of India announced
the Startup India initiative. After a period of approximately five months i.e. on 16th January,
the historic Startup Action Plan (hereinafter referred to as the plan) of the same was unveiled.
Prima facie it is well understood by the readers that since the initiative itself is named Startup
India the basic or the essential motive of the same would be to promote entrepreneurship, but
what will be dealt in this blog is how exactly is the plan promoting the essential motive of the
initiative. Thus in this blog I would try to take up all the essential points but not all the points of
the policy issued by the government which promote entrepreneurship.
The first and foremost important need for any startup to survive is the funding. The plan
envisages that Government will set up a fund with an initial corpus of INR 2,500 crore and a
total corpus of INR 10,000 crore over a period 4 years (i.e. INR 2,500 crore per year) in order to
provide funding support to Startups. The point worth noticing is that if such funds are invested in
any startup or any group of startups, then there is a high risk that such funds could be misutilised.
Therefore to avoid such a situation it was specifically mentioned that the fund will be in the
nature of Fund of Funds, which means that it will not invest directly into Startups, but shall
participate in the capital of SEBI registered Venture Funds. Further it was also provided that such
funds were to managed by a board which will be constituted of private professionals drawn from
industries, academia or successful startups.
The next financial benefit which was offered under the plan was that the startups will not have to
pay any taxes for a period of three years. This was done considering the fact that since the
startups depend heavily on other bodies for their financial activities, taxing them in the especially
in their initial years would discourage the people to startup something on their own.
The next point in the plan which curbs discouraging the entrepreneurs is the eradication of the
time consuming process in grant of the certificate to commence the services of the startups. It is
undoubtedly true that the time taken by the authorities in granting the certificate to allow the
commencement of the startup is too long, due to which the startups may face problems in their
other activities like granting of bank loans or recruiting the staff to work for them. Therefore
keeping this in mind, the plan mentions that all the requisite formalities like the certificate of
commencement and the likes must be filed online through an app. Further all the details
regarding the application like the status of the same, or a copy of the same must be made
available by the app. This would attract the startups and increase entrepreneurship as the long
time lag which used to become a hindrance would be solved.
With intent to promote the Intellectual Property Rights, the plan mentions that IPR are emerging
as a strategic business tool for any business organization to enhance industrial competitiveness.
Therefore in order to survive in such competitive world the startups must have continuous
growth and development oriented innovations and for this, it is equally crucial that they protect

their IPRs. The plan thus provides for fast tracking of startup patent applications, keeping in
mind the fact that the value of any innovation gets immensely high once it is covered under
patent protection. The plan also mentions that the central government shall bear the facilitation
fees and the startups shall only bear the statutory fees.
Another time consuming aspect is the certification that the startup meets with the requirement of
compliance with law. Regulatory formalities requiring compliance with various labour and
environment laws are time consuming and difficult in nature. But the small and new startups do
not have enough resources as well as time to get such certification. The plan thus to overcome
such hindrance enumerated that a self certification in this regard that such regulatory formalities
are being complied with is sufficient and thus no inspection would be conducted for a period of
three years. However this doesnt mean that the startup in its initial 3 years doesnt need to
comply with such regulatory framework, it is only the inspection which is not to be done. This
means that if on inspection at a later stage it is found that the startup didnt comply with the
regulatory framework, actions can be taken against them.
These are only a glimpse of a few amongst many points of the plan which was announced by the
Prime Minister. After looking at the plan introduced by the government, the least which can be
said is that the government is very adamant to promote the entrepreneurship within the country.
Though not much time has elapsed since the plan was announced, but what has been observed is
that the people of our country have shown a great enthusiasm and have taken a step forward to
follow their zeal in establishing their innovative ideas and creativity to convert it into a startup,
which, in a sense, while looking at the policy is a great deal.

Reference
Startup India Action Plan, available at
http://www.pradhanmantriyojana.in/wpcontent/uploads/2016/01/StartupIndia_ActionPlan_16January2016.pdf.